On February 1, the U.S. Commerce Department, Bureau of Industry & Security (BIS), announced a settlement (available here) with Princeton University in connection with 37 alleged violations of the Export Administration Regulations (EAR). The EAR are the main regulations that govern exports of commercial goods, software and technology; BIS has principal responsibility for administering and enforcing the EAR.
The settlement is a valuable reminder of the amount of export-controlled activity that takes place at and involving universities, academic medical centers, and other research institutions. Penalties for export violations can be significant. Legal departments, compliance departments, and offices of sponsored research therefore must ensure that faculty – many of whom may be non-U.S. nationals – are aware of their responsibilities under U.S. export law.
According to BIS, the violations occurred when Princeton exported strains and recombinants of animal pathogen to non-U.S. research institutions. These items are controlled for export for chemical and biological reasons, and thus an export license is required to make the exports. Princeton did not obtain the necessary export licenses.
Recipients of these exports were located in the following countries:
- South Korea
- United Kingdom
Princeton agreed to pay a civil penalty of $54,000. Princeton also agreed to complete one external audit within six months of the settlement date and one subsequent internal audit of its export compliance program. The results of both audits must be submitted to BIS, along with detailed plans for any necessary corrective actions.
In addition, Princeton is required to submit two reports – one due 12 months from the settlement date, the other due 24 months from the settlement date – describing export compliance enhancements it has made.
Failure to meet any of these requirements could lead to additional penalties, including Princeton losing its export privileges.
Analysis of Matter
Most of the countries to which these exports were made are close U.S. allies – the list is not exactly the axis of evil. While there are undoubtedly trade tensions with China, most U.S. exports to most Chinese destinations are authorized.
In addition, nowhere in the settlement documents does BIS assert that Princeton's actions were nefarious or posed a meaningful threat to national security. In fact, it seems likely that these exports were in furtherance of medical research, which arguably is in support of U.S. and other countries' national security.
Nonetheless, the purpose of an export is ultimately not relevant if the necessary authorization is not obtained. This is particularly important to remember in the university context given the perception that university research may be for the common good and/or is otherwise immune from licensing requirements.
Another challenge in the university and academic medical center research context is that students, postdoctoral researchers, and faculty are often not nationals of the United States. Even if authorized to be in the United States as part of the faculty or a student at a U.S. institution, U.S. export law views these non-U.S. nationals as though they were still in their home country. Export-controlled technical data shared with a non-U.S. national in the United States is treated the same as if a hard copy of that data was sent by courier to the individual's home country.
Takeaways for Research Institutions
While controls on technology do not appear to have been directly implicated in the Princeton settlement, technology can cross national borders – including through sharing such data orally or visually with a non-U.S. national in the United States – very easily. This is especially true at research institutions where the nature of collaboration means that there is an expectation that data will be shared openly. This is fine and desirable. But it also requires careful consideration and appropriate controls. Without such controls, more universities are likely to encounter export compliance problems when sharing goods and know-how with their counterparts.
Originally Published by Bass Berry, February 2021
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